Board Votes to Increase Tuition by Six Percent

During their General Session on Feb. 26, the Board of Trustees approved a six percent increase for tuition, room and board, and mandatory fees for the 2011-2012 academic year in a decision that Board of Trustees Chair Molly Mahoney Matthews described as following a “difficult discussion.”

As part of the Trustees’ and the administration’s dedication to accessibility, Vice President for Business and Finance Tom Botzman explained that the budget for need-based aid will increase by six percent as well.

Prior to the Board of Trustee General Session, Botzman attended the Student Government Association (SGA) meeting on Feb. 22 in order to explain the need for the tuition increase.

In speaking to the SGA about the six percent increase, he said, “you were certainly hoping for a lower number — I was too.”

Even so, he said with the current economic climate, “we should be happy that we’re holding our ground.”

Botzman explained that the Class of 2013 will likely be the first class to have all four years of their education overlap with a national financial crisis since the 1970s.

Such an economic climate has directly contributed to the tuition increases at St. Mary’s, according to Botzman.

Increased retiree and health benefits costs imposed by the state of Maryland, the St. Mary’s College of Maryland Foundation’s struggle to provide any sort of support, and the loss of revenue projected for next year due to a decreased proportion of out-of-state students are all directly connected to the recent recession and its fallout.

The costs due to retiree and health benefits would have necessitated a three percent increase on their own, said Botzman.

The Foundation’s inability to provide funds for approximately $800,000 in scholarships in the past three years has also contributed to rising costs as the College is providing the funds for such scholarships in its operating budget once again.

Many prospective out-of-state students have also chosen to attend schools where they can receive a state-funded education, leading to a significant loss of revenue for the College.

Botzman said that these circumstances necessitate a tuition increase, especially since the College’s block grant from the state is only receiving a 1.6 percent inflator.

The block grant covers approximately 27 percent of the College’s operating budget for the 2010-2011 academic year, according to a presentation Botzman gave during several occasions last fall.

Tuition woes have also been exacerbated by the block grant system; since St. Mary’s is not part of the University System of Maryland, state funding is not based on population.

Despite complying with a 25 percent population increase requested by the state earlier this decade, the College’s block grant has only increased by 19 percent in the past ten years, according to President Joseph Urgo.

Since administrators want to maintain the high academic standard for the College, budget cuts are difficult to execute without compromising quality.

In the end, these increasing costs must be covered by tuition increases.

“A lot of what we do is different from a business … We can’t run a deficit and then cut programs,” Botzman said to the SGA in explaining why these costs must be covered immediately by a tuition increase.

The Board of Trustees expressed a similar sentiment on Saturday morning, with one member saying there are “no alternatives but to pay our bills.”

The motions to increase tuition, room and board, and fees were approved almost unanimously, with Student Trustee Danny Ruthenberg-Marshall, senior, being the only member of the Board who voted against the increase.

In his column from Feb. 15 in The Point News, Ruthenberg-Marshall explained that, despite his understanding that the additional revenue is necessary, his voting against the increase was due to his commitment to represent the opinion of the student body.

However, Ruthenberg-Marshall was not the only student representative present.

The Board of Trustees also listened to student concerns on tuition increases.

Ruthenberg-Marshall and Dean of Students Laura Bayless asked for student volunteers to speak with the Board about their experience with tuition increases and financial aid.

Much of the discussion throughout the meeting centered on the nature of the College’s financial aid system in light of the tuition increase and its impact on lower-income students, with attention being paid to the differences between non-need based financial aid and need-based aid. (Urgo refers to “merit” scholarships as “non-need based” aid, pointing out that all financial assistance offered to accepted students is intrinsically merit based.)

In his report to the Board, Urgo explained that “the tradition of non-need based merit scholarships is antiquated and counterproductive” since it was developed to encourage students to attend college instead of entering the workforce in an era when a college education was not always the best path to success.

He maintained that scholarships for “students whose families have the financial resources to pay the full amount” conflicts with the College’s mission and dedication to access.

“It does not provide access for those who lack the financial means to attend an elite, residential liberal arts college; it instead provides a bargain to those who have numerous other options,” Urgo said, asking that there be a dialogue concerning a shift from non-need based financial aid to a completely need-based system.

Such a change would have an impact on the College’s rankings. Rankings are based on an entering class’s average SAT scores and high school GPA, not on “the quality of education delivered or how much students learn in our classes,” said Urgo.

With a reduction in non-need based financial aid, wealthy students who were able to attend private or well-funded high schools may choose to attend colleges that offer them scholarships, meaning that the average SAT scores and GPA for St. Mary’s students would drop and rankings along with it.

Urgo explained that colleges around the nation are dealing with this predicament, pointing out that it begs the administration to question: “How do we balance between two goals, our ranking and our mission?”

The College has been heading in the direction that Urgo is pushing for for many years.

In an interview with The Point News after the Board of Trustees General Session, Botzman said that, though tuition has risen by 85 percent, financial aid has risen by 232 percent.

According to Botzman’s presentation to the SGA, only one-third of the financial aid budget was dedicated to need-based aid ten years ago; today, two-thirds of financial aid offered by the College is need-based.

Even so, Urgo has created a task force in academic affairs in order “to study the relationship between financial aid and student performance.”

In addition, this task force will examine how it is “possible to begin to shift funds more aggressively away from non-need based scholarships to need-based financial assistance without jeopardizing academic rigor and the standards appropriate to an honors-level program.”

“I’d like to see students despite financial status drawn to St. Mary’s College not simply because of its value, but because of our values,” said Urgo, pointing to the College’s “egalitarian ethos” and its dedication to “address[ing] the cycle of privileged education in America by making an elite education accessible to the public.”

For now, tuition increases will be negatively impacting students and their families’ ability to cover costs.

There are emergency funds that have helped over two dozen students over the past years and that are available for students who are struggling financially, though Dean of Admissions and Financial Aid, Wes Jordan, explained that these funds are usually reserved for students who experience catastrophic difficulties.

Fund-raising remains as the top priority to avoid such high increases in the future.

Any students who are interested in learning more about tuition, the College’s operating budget and the College’s sources of revenue are encouraged to attend the SGA meeting on Mar. 8 where Botzman will be giving a more thorough presentation on the recent tuition increase.

“You have the right to know” about such financial matters, said Botzman to the SGA in his previous discussion, “you make a huge investment in this place.”

 

Tuition Increases Likely for All Students

Allow me to apologize in advance, because most of what you’re about to read will not be good news.

There will be a tuition increase this year – likely around six percent for in-state and an equal dollar amount for out-of-state.

As with most of you and your families, this institution is suffering financially. Our Foundation is not able to give nearly as much money to the school as it has in the past, and our costs are rising.

How are our costs rising when inflation is so low and we’re doing so many things to cut cost? Three ways: first, cost cuts can only cover so much, as we cannot sacrifice the quality of our program for the sake of budget.

If we did that, we would become just another Salisbury or Frostburg. Second, despite low inflation, some specific expenses continue to rise rapidly. One example is retiree benefits.

Under state law, we are required to provide our employees with a certain level of retiree benefits.

When these premiums rise by ten percent, it hits us hard, costing the institution an additional half million or so dollars, without us seeing any additional benefits.

That hurts. While that is an extreme example, there are other instances of it littered throughout our budget and the budget of every institution in the country.

The third way is perhaps the most difficult one to accept. Our revenue stream is declining.

One of the biggest ways in which this is happening, though there are plenty of others, is through the change in percentage of out-of-state students.

Based on our best estimates, the incoming class of 2015 will likely have forty fewer out-of-state students than the outgoing class of 2011.

That means next year, the whole school will have forty fewer out-of-staters than it does this year.

With an average difference of $10,000 in tuition for in-state versus out-of-state, we’ll have approximately $400,000 less in next years budget.

But shouldn’t the state give us more money for the additional in-state students we have? Well, that’s how it works at most state schools, but we have what’s called a block grant.

That is, we have a certain chunk of money that we get every year, regardless of how many in-state and out-of-state students we have.

That amount normally goes up by the standard rate of inflation each year, and it will go up by that again this year.

The problem is, over the last two decades, the portion of our budget that we get from the government has declined by around twenty percent.

It used to be nearly half of our budget, and now it’s just over a quarter. Again, this raises the question of, “Why?”

In the 1990s, the state government asked us to increase our student population from 1450 to 1850. We said yes, despite not getting a bump to our block grant to coincide with the bump in students.

Earlier this decade, students were seeing annual tuition increases of more than ten percent at times.

This inequity, corrected by charging the students more, is one of the primary reasons our in-state tuition and fees are more than $5,000 higher than University of Maryland College Park.

Not coincidentally, our out-of-state costs are nearly identical with College Park.

These two numbers will go up by the same dollar amount, and not the same percentage, for the foreseeable future, as the college doesn’t want to unfairly distribute financial burdens.

So what’s going to happen with financial aid? The College has made a commitment to increase our financial aid budget by the same percentage as we increase tuition.

While this is necessary, it’s sort of like stealing from the left hand to feed the right.

With our financial aid budget at over six million dollars, a proportionate increase to that detracts from our added revenue due to tuition increase.

Let’s recap: tuition will go up for three reasons. We can only cut costs so much, some expenses continue to rise, and our out-of-state enrollment is shifting significantly.

The proportion of the state government’s contribution to our budget has decreased drastically over the last two decades.

Tuition increases back in the day were insane. Financial aid will still go up by the same percentage. Our budget is suffering big time, even with small tuition increases.

Where do we go from here? We keep looking for ways to cut costs without hurting our program, we keep pressuring the state government to continue with their support and, when possible, to increase it, and we look for more ways to increase financial aid.

As the state balances its books and the economy slowly recovers, things will get better.

Until that time, I promise to do everything in my power to keep tuition increases as low as feasible, and keep looking for new ways to raise money.

When this comes to a vote at the next Board meeting, I will be voting “no” on the issue. It will still pass despite this. Good luck to everyone in making next year’s payment, and I’m sorry I can’t do more.

Tuition Likely To Increase In Spring

With the continuation of tough financial times and the related difficulties of budget planning, St. Mary’s College tuition is most likely to increase once again this semester. How much of an increase, however, is currently up in the air.

Vice President of Business and Finance Tom Botzman laid out the current budget concerns, the many factors going into the rising cost of the College’s operation, and potential solutions (including tuition increase) in his presentation to concerned members of the campus community Friday entitled Sustainability of the College’s Financial Model.

In this presentation, Botzman first outlined how the St. Mary’s budget works. He said that the budget is divided between the operating budget, which is what the College uses for day-to-day operations, the capital budget, which is used for building projects and maintenance, and the St. Marys College of Maryland Foundation, a 501(c)3 non-profit organization which handles the College’s endowment portfolio (money which is donated to the College to be used as investment capital).

The operating budget of the College is, according to Botzman, around $69 million.

Botzman noted that the College’s revenue comes from four sources: tuition and fees (44 percent); auxiliary services, including the book store and money paid for housing (27 percent); a state block grant based on the cost of living (27 percent); and other sources (22 percent).

Botzman also outlined the primary reasons that the College is in a difficult financial situation. The biggest one, and the one from which many of the others stem, is the current economic recession. Botzman asserted that the past two years “[were] the most difficult budgeting years since the Great Depression.”

This difficult economy has in turn led to a substantial decrease in the amount of money coming from investments made with endowment money, even fixed investments. According to Botzman, case transfer from the Foundation to the College (disregarding money for facilities) went from a high in fiscal year (FY) 2006 of $1.8 million to only $400,000 in FY 2010.

Vice President for Development Maureen Silva, who gave a presentation entitled Trends in Board Fundraising before Botzman’s, said that there was a loss of around $2 million in the endowment during 2008 and 2009, but that it had been recovered for the most part this year and that it was relatively, “not a dramatic decline, and certainly not as dramatic as other institutions.”

Another major problem facing the College is the ballooning cost of health care, for current, and especially retired, faculty. Botzman said that heath insurance costs for the College will increase by $427,000 next year. In contrast, the increase in the College’s state block grant is expected to only be around $280 thousand.

According to Botzman, it would take a three percent increase in tuition next year just to cover health insurance and retiree health benefits.

Other challenges for the College include the meal plans, upon which all profits or loss are taken by the College and a drop in revenue from the book store.

Botzman also discussed how increases in tuition would affect the College. A one percent increase would amount to a $1.2 million deficit and a $200,000 increase in revenue, with each percentage point increasing revenue (and therefore decrease deficit) by around $200,000.

Botzman then outlined three possible scenarios: an increase in tuition by three, six, and nine percent.

A three or six percent increase would still require the College to freeze faculty lines and reduce transfer to the Physical Plant budget, though the nine percent increase would allow an increase to financial aid and would allow the College to restore two eliminated faculty positions.

However, Botzman said he realizes any increase in tuition will increase student strain and decrease diversity on campus.

The College is also in the process of attempting to boost fundraising in order to lessen the need for tuition increase and make the College more stable in the tough economy. In her presentation, Silva emphasized reaching out to alumni and friends of the College, and was optimistic about efforts on this front.

She said, “we’ve more than doubled what was raised last fall… there are a lot of alumni excited about [President Joseph Urgo] and the way the College is heading.” She also said she was confident that she could significantly increase alumni giving through outreach, and planning for a new fund-raising campaign will begin in 2011.

Another possibility for helping the College’s finances would be to reapply for the yearly state block grant, which was last set in 1992 and not tied to the number of students currently enrolled. Since 1992, the College has added around 400 on-campus students.

Botzman said, however, that this possibility was difficult to justify unless the College were to go on a growth campaign, which there are no plans of doing.

Considering that the state has just announced a $1.6 billion deficit that needs to be fixed this year, Botzman said this was an unlikely solution for the short-term. He did say, however, that “the Governor has been really supportive of the College.”

Botzman said that the final tuition increase will most likely be announced in February, at the next Board of Trustees meeting and after the Governor’s budget comes out the following month.
Despite the difficulties of the budget, Botzman remained optimistic.

“The President and Board of Trustees are committed to keeping the quality of academic and residence programs while keeping the cost of the College affordable for students and there families. That’s always the balance.”